Illinois lawmakers regulate medical debt collection and prohibit interest on patient payment plans

On January 24, 2025, the Illinois Senate introduced SB1223, a legislative bill aimed at reforming the collection practices for medical debt in the state. The bill seeks to address the growing concerns surrounding medical debt, which has become a significant issue for many patients struggling to pay hospital bills.

The primary provisions of SB1223 include restrictions on collection actions against patients who have requested a reasonable payment plan. Hospitals are required to wait 90 days after such a request before initiating any collection efforts. Additionally, the bill mandates that no legal action for non-payment can be taken without the written approval of an authorized hospital employee, ensuring that collection practices are closely monitored.

Another key aspect of the bill is its focus on patients undergoing insurance appeals. Medical creditors are prohibited from contacting patients about unpaid charges if there is an ongoing review of their health insurance decision. This provision aims to protect patients from aggressive collection tactics while they are still navigating their insurance claims.

The bill also introduces a significant change regarding interest on medical debt. If a patient qualifies for financial assistance and has established a reasonable payment plan, no interest will be charged on their medical expenses. This provision is designed to alleviate the financial burden on patients who are already facing challenges in paying their medical bills.

While SB1223 has garnered support from various advocacy groups focused on consumer protection and healthcare affordability, it has also faced opposition from some healthcare providers concerned about the potential financial implications of the bill. Critics argue that the restrictions on collection practices could lead to increased financial strain on hospitals, particularly smaller facilities that rely on timely payments to maintain operations.

The implications of SB1223 are significant, as it addresses both the economic and social dimensions of medical debt. By providing clearer guidelines for collection practices and protecting patients during insurance disputes, the bill aims to create a more equitable healthcare system in Illinois. As the legislative process continues, stakeholders will be closely monitoring the discussions and potential amendments to the bill, which could shape the future of medical debt collection in the state.